My apologies to pawn shops


September 30th, 2016

In the wake of America’s big economic crisis back in 2008, dollar stores and thrift stores have seen a big resurgence. And now, another kind of retail quasi-lender is commanding all kinds of attention from sellers and buyers: pawnshops.

I admit to having grown up with a weird bias against pawnshops. To me, pawnshops were just one level above Vinny the Loan Shark operating illegally in some dark alley in the bad part of town, just waiting to break some knees. Where did that come from? I have no idea really, but let me quickly follow by saying that it is a most false stereotype. Pawnshops are respectable businesses that offer a viable service in many communities. These days, business is booming.

A pawnshop, owned and operated by a pawnbroker, makes secured loans on personal property that customers leave as collateral. The customer can redeem the property when the loan and loan interest are paid off. Think secured loans.

Interest rates charged by pawnshops, which in some states are regulated by state and local laws, can range from 5 to 6 percent per month. That’s high, I know, but we’re talking very short-term loans here. And the loans are on merchandise that is often used and in some cases suspect because it’s impossible for the broker to predict the collateral’s true value, should he have to sell it to recoup the money lent.

Pawnbrokers accept a variety of personal property as collateral — jewelry, clocks, computers, firearms, art, electronics and collectibles. When a pledged item is not redeemed, brokers are required to notify the customer that the loan period has expired and give the customer a final opportunity to redeem the property. Once expired, the broker has the right to sell the item. In some states, the pawnbroker gets to the keep the full proceeds from the sale; in others, once the loan and interest is recovered, the balance of the sale price, or some portion thereof, is paid to the pawner.

In many states, pawnbrokers are required by law to file a daily list of items that have been pledged, including serial numbers and other identifying information. This gives police the opportunity to recover stolen items.

A pawnshop may not be the best place to liquidate items you wish to sell outright. Sites like eBay and Craigslist, or the local classifieds, would likely fetch a higher price. But for the person who needs some quick cash and is willing to put up something of value to secure a loan, a pawnshop could be the right choice.

Now, let me point out the upside of a pawnshop: bargains. Go to a pawnshop if you’ve never been to one. Expect to find a large variety of jewelry, power tools, electronics, cameras, computer games and computers. You do need to know your stuff; don’t expect pawnbrokers to be experts on all of the items they offer. And never forget that a pawnbroker is in business to turn a profit. Whether you’re a pawner or a buyer, everything is negotiable!

published September 21, 2016 http://www.stardem.com/life/advice/everyday_cheapskate/article_709dca27-e4ab-5bbd-ae27-6e72004acbc1.html

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